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Insuring against Tsunami

In the wake of the recent tsunami that hit Japan and the 2004 tsunami that devastated the coastal areas of India, a question has arisen- if an insurance coverage is available in India? However, in India tsunami’s has been reported as far back as 1762.

The Indian peninsular is covered by the water bodies on three sides; therefore those staying in the coastal area in earthquake vulnerable areas are definitely having a tsunami insurance coverage. Coverage for tsunami insurance is not required if you are living in the inlands, comfortably far away from the sea.

Sadly, insurance companies are yet to provide a tsunami policy and world over the only option for tsunami insurance is through coverage provided for natural calamities like flood, landslide, earthquake, volcanic movement, etc. The term ‘tsunami’ and ‘tidal wave’ is the same thing. The world ‘tsunami’, a Japanese world was created by the scientific community to distinguish tsunami damage from other forms of flood and earthquake damage. Earthquakes, submarine landslides and volcanic eruption are some of the sources of these killer waves.

Why no Tsunami insurance Cover

A characteristic that distinguishes tsunami from most other major hazards is that it does not occur from one cause, as some experts say, to define tsunami as a result only of earthquake is a narrow definition. While ‘earth quake’ is a narrow term to define the cause of tsunami, ‘earth movement’ is a broad term that includes earthquakes, landslides, rockslides, mudslides, subsidence, etc. Therefore it is better to take insurance for both flood and earthquake.

Types of possible insurance coverage

In India insurance for perils due to tsunami can be ensured through some coverage provided home, auto, and fire and special peril insurance policies. As a policy general insurers do not offer blanket policies that cover all risks. However world over, some coverage is provided as part of different insurance policies:

Home Insurance 

Though the risk of damage of a house and its contents following flood, earthquake, tsunami, fire are insurable risks, specific policies may choose to exclude it. Before buying a policy, check if it covers the specific risks you are looking to insure against. Since insurance is against the property, the protection against natural calamities is added to the insurance plan depending on what you want to insure. Home insurance policy, offered by general insurers in India secures the structure and contents of a building used for residential purposes. It covers risks that follow fire, earthquake, flood, storms and landslide. To be extra cautious, take photos of the document and belongings which might come handy while making claims.

Travel insurance 

If your are planning a tour to a tsunami prone areas consider taking a travel insurance for natural calamity, which can provide some protection of one’s possessions and medical emergencies if a tsunami occur during tour. An insurer should specify that coverage is for both trip interruptions due to natural calamities along with travel insurance coverage while at the destination. Car Insurance
Be cautious that your policy might state that your car is protected against damages caused by fire, earthquake, and landslide. However, tsunami and flood may have been excluded. In this case, if your car gets damaged in a sudden flood or tsunami, you cannot claim anything.

Flood Coverage

Some insurance companies, outside India, consider all forms of wave damage including tsunamis and tidal waves as flood losses. These groups are not concerned with what caused the flood. Therefore, those staying areas affected by the devastation by a flood should purchase flood and earthquake insurance for their home, so as to get a cover for tsunami. The policyholder should ask their insurance agents and brokers about difference in conditions coverage. Even if you do not live in a flood zone you can ensure a cover for tsunami if you buy an inexpensive policy for flood.

Terms and Conditions 

“One must make certain that the policy insures (and does not exclude) all forms of damage by surface water and all forms of earth movement including earthquake, landslide, sudden collapse of land into the sea, collision of the earth with objects from space, and volcanic eruption.......... If a policy insures against tsunamis caused by earthquake, it does not insure against tsunamis caused by other kinds of earth movement or by such events as an asteroid colliding with the earth.” - As told by ‘Willis in ‘Perspective - Tsunami.

Valuation and premiums 

It is advisable to take the valuation at the prevailing market price. In 2004, the economic loss to the nation and insurance companies was less because most of those directly affected by the flood had not taken any kind of preventative insurance. General insurance policies are normally issued for a year and have to be renewed at the end of every year. So, if the construction cost of the building rises, you need to get the sum insured revised warns an insurance expert. 

Insurance companies that insure people against natural disasters tend to charge high insurance premiums because they never know when they might need to have the money in hand to reimburse people for their damages. Therefore check what are the insurance amount that you will get and the actual amount that you would like to have during the time of a disaster. Weigh the costs of disaster coverage against the benefits of being protected in case a tsunami or other disaster ever does hit the area in which you live. 

‘Premium rates are almost standardised in a home insurance policy (high risk zones from a seismic or flood point of view do not require significantly higher premium payments). The premium will, however depend on the combination of risks one chooses to cover. For a fire and special peril policy, the average rate is Rs 70-100 per lakh currently. But for a flood cover in a rainy season, you may be charged some premium. The bottom-line of an insurance policy is to cover unforeseen risks, so you cant rush to insure after a flood warning has already been issued.”- ‘The Hindu Businessline 

To conclude, those staying coastal areas should take a protection rider against tsunami. Natural calamities strike without any prior notice. Some amount of extra premium can help you stay insured and secure damage to your property.

Premiums are calculated according to the age of the insurance taker and other specifications.

Coverage For Natural Calamities Provided Under Fire And Special Peril Policies

  • A uniquely designed plan includes natural calamities which are commonly exposed to the risk of fire and allied perils 
  • Fire
  • Lightning
  •  Storm, typhoon, hurricane, tornado, flood and inundation
  •  Impact damage
  • Subsidence and landslide, including rockslide
  • Bush fire
  • Some add-ons are also provided on extra premium
  • Forest fire
  •  Earthquake (fire and shock)
  • And many more…..
  • But some perils are not covered
  •  Normal cracking, settlement, bending down, upheaval of land/structures, coastal or river erosion, defective design, workmanship or use of defective materials
  • Destruction or damage caused by forest fire
  • Excess amount
  • Loss or damage by pollution or contamination except due to insured peril

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